[Federal Register Volume 65, Number 72 (Thursday, April 13, 2000)]
[Proposed Rules]
[Pages 19862-19864]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-9088]


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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 65, No. 72 / Thursday, April 13, 2000 / 
Proposed Rules  

[[Page 19862]]



FEDERAL RETIREMENT THRIFT INVESTMENT BOARD

5 CFR Part 1605


Correction of Administrative Errors

AGENCY: Federal Retirement Thrift Investment Board.

ACTION: Proposed rule with request for comment.

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SUMMARY: The Executive Director of the Federal Retirement Thrift 
Investment Board (Board) proposes to amend its regulations on 
Correction of Administrative Errors to change the period of time for 
submission of claims for the correction of errors in a participant's 
Thrift Savings Plan (TSP) account. As presently written, certain 
sections of the regulations impose conflicting duties upon participants 
to file claims for correction of errors in their TSP accounts within 
one year of receipt of notice of an error, and also upon employing 
agencies or the Board to correct an error without regard to when the 
error is discovered. The amended regulation resolves this conflict by 
specifying when errors must be corrected by the employing agency, the 
Board, or the TSP record keeper, as the case may be, and when they may 
be corrected in the sound discretion of these parties.
    In addition, the amended regulation provides that lost earnings in 
back pay cases involving separations from service will be calculated 
based upon the G Fund rates of return, as the regulation presently 
provides, or as otherwise ordered by the court or other tribunal with 
jurisdiction over the back pay case.

DATES: Comments must be received on or before May 15, 2000.

ADDRESSES: Comments may be sent to Elizabeth S. Woodruff, General 
Counsel, Federal Retirement Thrift Investment Board, 1250 H Street, 
N.W., Washington, D.C. 20005.

FOR FURTHER INFORMATION CONTACT: Merritt A. Willing on (202) 942-1666 
or Patrick J. Forrest on (202) 942-1659, FAX (202) 942-1676.

SUPPLEMENTARY INFORMATION: The Board administers the Thrift Savings 
Plan (TSP), which was established by the Federal Employees' Retirement 
System Act of 1986 (FERSA), Public Law 99-335, 100 Stat. 514, codified, 
as amended, largely at 5 U.S.C. 8351 and 8401-8479. The TSP is a tax-
deferred retirement savings plan for Federal employees, similar to a 
cash or deferred arrangement established under section 401(k) of the 
Internal Revenue Code. Sums in a TSP participant's account are held in 
trust for that participant.
    On December 27, 1996, and May 1, 1998, the Board published final 
rules in the Federal Register concerning the correction of 
administrative errors (61 FR 67472 and 63 FR 24380). These rules were 
codified at 5 CFR part 1605. The final rules explain how employing 
agencies, the TSP record keeper, and the Board identify and correct 
administrative errors in TSP contributions or account balances. The 
proposed rule amends these rules.
    The Board proposes to change the method of calculation of lost 
earnings for makeup contributions from certain back pay awards 
involving separations from service. Currently, Sec. 1605.4(a)(3) 
describes a process for determining lost earnings based upon the rates 
of return for the G Fund. The rule does not take into account the 
circumstances of individual cases that are brought before and 
considered by the court or other tribunal with jurisdiction over the 
back pay case. Thus, the amendment provides that the TSP will use the G 
Fund rate, unless otherwise ordered by the court or other tribunal with 
jurisdiction over the case.
    Section 1605.6 describes procedures for participants filing claims 
against employing agencies. Section 1605.8 describes a similar process 
for claims against the Board or TSP record keeper. Currently, paragraph 
(b) of Sec. 1605.6 provides that, if an agency has not voluntarily 
corrected an administrative error, a participant must file a claim for 
correction within one year of receipt of the earliest of several forms 
of notice of the error. At the same time, the regulation requires 
agencies to ``promptly correct'' errors ``upon discovery.'' Thus, a 
conflict exists between a participant's obligation to file a timely 
claim for correction and an agency's obligation to correct 
administrative errors ``upon discovery,'' which may occur after the 
participant's right to file a claim has expired. A similar conflict 
exists in Sec. 1605.8(c) with respect to claims for correction of Board 
or TSP record keeper errors. Although it has been the Board's 
experience that errors are almost always corrected upon discovery, the 
Board recognizes that this conflict should be eliminated to the extent 
possible.
    The amended regulation imposes different obligations on employing 
agencies, the Board, and the TSP record keeper to correct errors 
depending upon the length of time that has passed between the error and 
its discovery. Certain types of errors must be corrected if they are 
discovered within six months. For agencies, these errors concern the 
amount and timely remittance of contributions. For the Board and TSP 
record keeper, these errors concern elections to withdraw a TSP account 
and the distribution of death benefits. If such errors are discovered 
more than six months after their occurrence, the agency, Board, or TSP 
record keeper may exercise its sound discretion in deciding whether to 
correct them. (It is assumed that none of the foregoing errors are 
first discovered by a participant.)
    For such errors that are discovered by participants, the amendment 
permits them to file claims against their employing agencies, the 
Board, or the TSP record keeper without limitation as to time. If the 
claim is filed within six months of the error, the error must be 
corrected; otherwise, the agency, Board, or record keeper may use its 
sound discretion in deciding whether to do so. (Although a participant 
is not limited as to time in filing a claim for this type of error, the 
agency, Board, or record keeper, in deciding the claim, may consider 
the length of time that has passed since the participant first knew, or 
should have known, of the error.)
    For any other type of error (except a retirement system 
misclassification error, discussed below), the agency, Board, or TSP 
record keeper, as the case may be, must correct the error if it is 
discovered within 30 days of the issuance of the most recent TSP 
participant statement or transaction confirmation that reflects the 
error; if it is discovered after that time, they may use their sound 
discretion in deciding whether to do so. (Participant statements will 
be issued in May and

[[Page 19863]]

September during 2000; thereafter, participant statements will be 
issued in January, April, July, and October of every year.)
    For such errors discovered by participants, claims must be filed 
with the participant's employing agency, the Board, or the TSP record 
keeper within 30 days of the participant's receiving notice of the 
error in the TSP participant statement or transaction confirmation. For 
timely filed claims, the errors must be corrected. For untimely filed 
claims, however, the agency, Board or TSP record keeper may use its 
sound discretion in deciding whether to do so. While participants are 
therefore required to be diligent in discovering errors in their 
accounts, the Board considers this to be reasonable, particularly in 
the daily transaction environment forthcoming on October 1, 2000.
    There is one type of error for which participants will not be able 
to receive correction after October 1, 2000, if they have not filed a 
timely claim. As amended, Secs. 1605.6 and 1605.8 provide that no 
contribution allocation errors occurring before October 1, 2000, may be 
corrected if the participant does not bring the error to the attention 
of his or her agency (or the Board or the TSP record keeper, as the 
case may be) within the relevant 30-day period. The Board will 
implement a new record keeping system on October 1, 2000, and, inasmuch 
as pre-conversion contribution allocation errors will be extremely 
difficult to correct, the Board must insist on compliance with the 30-
day limit.
    Errors arising from retirement system misclassification must be 
corrected no matter when they are discovered, whether by an agency or a 
participant.
    Finally, current Sec. 1605.8(b) is amended by deleting that portion 
which describes internal processes between the Board and TSP record 
keeper and by clarifying the effect of a participant's failure to 
request Board review of a decision of the TSP record keeper in a timely 
manner.

Regulatory Flexibility Act

    I certify that these regulations will not have a significant 
economic impact on a substantial number of small entities. They will 
affect only employees of the Federal Government.

Paperwork Reduction Act

    I certify that these regulations do not require additional 
reporting under the criteria of the Paperwork Reduction Act of 1980.

Unfunded Mandates Reform Act of 1995

    Pursuant to the Unfunded Mandates Reform Act of 1995, 2 U.S.C. 602, 
632, 653, and 1501-1571, the effects of this regulation on state, 
local, and tribal governments and the private sector have been 
assessed. This regulation will not compel the expenditure in any one 
year of $100 million or more by state, local, and tribal governments in 
the aggregate, or by the private sector. Therefore, a statement under 
section 1532 is not required.

List of Subjects in 5 CFR Part 1605

    Claims, Employment benefit plans, Government employees, Pensions, 
Retirement.

Roger W. Mehle,
Executive Director, Federal Retirement Thrift Investment Board.
    For the reasons set out in the preamble, 5 CFR Part 1605 is 
proposed to be amended as set forth below:

PART 1605--CORRECTION OF ADMINISTRATIVE ERRORS

    1. The authority citation for part 1605 continues to read as 
follows:

    Authority: 5 U.S.C. 8351 and 8474.


Sec. 1605.4  [Amended]

    2. Section 1605.4 is amended by adding after the word ``account'' 
at the end of paragraph (a)(3) the words ``unless otherwise ordered by 
the court or other tribunal with jurisdiction over the participant's 
back pay case''.
    3. Section 1605.6 is revised to read as follows:


Sec. 1605.6  Procedures for claims against employing agencies; time 
limitations.

    (a) Agency's discovery of error. (1) Upon discovery of an error 
made within the past six months involving the correct or timely 
remittance of contributions to the TSP (other than a retirement system 
misclassification error, described in paragraph (c) of this section), 
an employing agency must promptly correct the error on its own 
initiative. If the error was made more than six months before its 
discovery, the agency may exercise sound discretion in deciding whether 
to correct it, but, in any event, the agency must act promptly in doing 
so.
    (2) For any other type of error (other than a retirement system 
misclassification error, described in paragraph (c) of this section), 
an employing agency must promptly correct the error on its own 
initiative if it is discovered before 30 days after the issuance of the 
most recent TSP participant statement that reflected (or would reflect) 
the error. If it is discovered after that time, the employing agency 
may exercise sound discretion in deciding whether to correct the error, 
but, in any event, must act promptly in doing so; provided, however, 
that no contribution allocation error which occurred before October 1, 
2000, may be corrected if it is not the subject of a timely claim.
    (b) Participant's discovery of error. (1) If an agency fails to 
discover an error of which a participant has knowledge involving the 
correct or timely remittance of contributions to the TSP, the 
participant may file a claim for correction thereof with his or her 
employing agency without limitation of time. The agency must promptly 
correct any such error for which the participant filed a claim within 
six months of its occurrence; the correction of any such error for 
which the participant filed a claim after that time is in the agency's 
sound discretion.
    (2) For any other type of error of which a participant has 
knowledge (other than a retirement system misclassification error, 
described in paragraph (c) of this section), the participant may file a 
claim for correction thereof with his or her employing agency no later 
than 30 days after the participant receives a TSP participant statement 
reflecting the error. The agency must promptly correct such errors.
    (3) If a participant fails to file a claim for correction of an 
error described in paragraph (b)(2) of this section in a timely manner, 
the agency may, in its sound discretion, correct any such error that is 
brought to its attention; provided, however, that no contribution 
allocation error which occurred before October 1, 2000, may be 
corrected if it is not the subject of a timely claim.
    (c) Retirement system misclassification error. Errors arising from 
retirement system misclassification must be corrected no matter when 
they are discovered, whether by an agency or a participant.
    (d) Agency procedures. Each employing agency must establish 
procedures for participants to submit claims for correction under this 
subpart. Each employing agency's procedures must include the following:
    (1) The employing agency must provide the participant with a 
decision on any claim within 30 days of its receipt, unless the 
employing agency provides the participant with good cause for requiring 
a longer period to decide the claim. A decision to deny a claim in 
whole or in part must be in writing and must include the reasons for 
the denial, citations to any applicable

[[Page 19864]]

statutes, regulations, or procedures, a description of any additional 
material that would enable the participant to perfect the claim, and a 
statement of the steps necessary to appeal the denial.
    (2) The employing agency must permit a participant at least 30 days 
to appeal the employing agency's denial of all or any part of a claim 
for correction under this subpart. The appeal must be in writing and 
addressed to the agency official designated in the initial decision or 
in procedures promulgated by the agency. The participant may include 
with his or her appeal any documentation or comments that the 
participant deems relevant to the claim.
    (3) The employing agency must issue a written decision on a timely 
appeal within 30 days of receipt of the appeal, unless the employing 
agency provides the participant with good cause for requiring a longer 
period to decide the appeal. The employing agency decision must include 
the reasons for the decision, as well as citations to any applicable 
statutes, regulations, or procedures.
    (4) If the agency decision on the appeal is not issued in a timely 
manner, or if the appeal is denied in whole or in part, the participant 
will be deemed to have exhausted his or her administrative remedies and 
will be eligible to file suit against the employing agency under 5 
U.S.C. 8477. There is no administrative appeal to the Board of a final 
agency decision.
    4. Section 1605.8 is revised to read as follows:


Sec. 1605.8  Claims for correction of Board or TSP record keeper 
errors; time limitations.

    (a) Filing claims. Claims for correction of Board or TSP record 
keeper errors under this subpart may be submitted initially either to 
the TSP record keeper or the Board. The claim must be in writing and 
may be from the affected participant or beneficiary.
    (b) Board's or TSP record keeper's discovery of error. (1) Upon 
discovery of an error made within the past six months involving the 
withdrawal of an account, the change of a withdrawal election, or the 
distribution of a death benefit, the Board or TSP record keeper must 
promptly correct the error on its own initiative. If the error was made 
more than six months before its discovery, the Board or TSP record 
keeper may exercise sound discretion in deciding whether to correct the 
error, but, in any event, must act promptly in doing so.
    (2) For any other type of error, the Board or TSP record keeper 
must promptly correct the error if it is discovered before 30 days 
after the issuance of the earlier of the most recent TSP participant 
statement or transaction confirmation that reflected (or would reflect) 
the error. If it is discovered after that time, the Board or TSP record 
keeper may use its sound discretion in deciding whether to correct it, 
but, in any event, must act promptly in doing so; provided, however, 
that no contribution allocation error which occurred before October 1, 
2000, may be corrected if it is not the subject of a timely claim.
    (c) Participant's or beneficiary's discovery of error. (1) If the 
Board or TSP record keeper fails to discover an error of which a 
participant or beneficiary has knowledge involving the withdrawal of an 
account, the change of a withdrawal election, or the distribution of a 
death benefit, the participant or beneficiary may file a claim for 
correction thereof with the Board or TSP record keeper without 
limitation of time. The Board or TSP record keeper must promptly 
correct any such error for which the participant or beneficiary filed a 
claim within six months of its occurrence; the correction of any such 
error for which the participant or beneficiary filed a claim after that 
time is in the sound discretion of the Board or TSP record keeper.
    (2) For any other type of error of which a participant or 
beneficiary has knowledge, he or she may file a claim for correction 
thereof with the Board or TSP record keeper no later than 30 days after 
receipt of the earlier of a TSP participant statement or transaction 
confirmation reflecting the error. The Board or TSP record keeper must 
promptly correct such errors.
    (3) If a participant or beneficiary fails to file a claim for 
correction of an error described in paragraph (c)(2) of this section in 
a timely manner, the Board or TSP record keeper may nevertheless, in 
its sound discretion, correct any such error that is brought to its 
attention; provided, however, that no contribution allocation error 
which occurred before October 1, 2000, may be corrected if it is not 
the subject of a timely claim.
    (d) Processing claims. (1) If the initial claim is submitted to the 
TSP record keeper, the TSP record keeper may either respond directly to 
the claimant, or may forward the claim to the Board for response. If 
the TSP record keeper responds to a claim, and all or any part of the 
claim is denied, the claimant may request review by the Board within 90 
days of the date of the record keeper's response.
    (2) If the Board denies all or any part of a claim (whether upon 
review of a TSP record keeper denial or upon an initial review by the 
Board), the claimant will be deemed to have exhausted his or her 
administrative remedy and may file suit under 5 U.S.C. 8477. If the 
claimant does not submit a request to the Board for review of a claim 
denial by the TSP record keeper within the 90 days permitted under 
paragraph (d)(1) of this section, the claimant shall be deemed to have 
accepted the TSP record keeper's decision.

[FR Doc. 00-9088 Filed 4-12-00; 8:45 am]
BILLING CODE 6760-01-U